System and method for creating a spot market

ABSTRACT

A system and method for soliciting and receiving bids for goods or services necessary to satisfy a spot need of a buyer. The system receives a request to procure goods or services that are required to satisfy the spot need of the buyer. The request includes information identifying the type of goods or services being procured by the buyer. Next, the system automatically selects a plurality of suppliers to invite to the on-line auction by querying a supplier database with information from the request. The supplier database includes records identifying suppliers capable of supplying a plurality of different goods and services to a spot marketplace. For each supplier represented in the supplier database, a record is stored in the supplier database, which includes information representing the capabilities of the supplier to deliver at least one good or service. The system automatically invites the suppliers selected from the supplier database to offer bids by sending an electronic communication to each of the selected suppliers. Each of the suppliers is electronically coupled on-line to the spot marketplace. Finally, a winner bidder is selected to satisfy the spot need of the buyer.

FIELD OF THE INVENTION

The present invention relates to a system and method for conductingelectronic auctions, and more particularly, to a system and method forcreating a spot market over a computer network.

BACKGROUND OF THE INVENTION

Advances in computer processing power and network communications havemade information from a wide variety of sources available to users oncomputer networks. Computer networking allows network computer users toshare information, software applications and hardware devices andinternetworking enables a set of physical networks to be connected intoa single network such as the Internet. Today, computers connected to theInternet have almost instant access to information stored in relativelydistant regions. Moreover, computers connected to networks other thanthe Internet also have access to information stored on those networks.The World Wide Web (Web), a hypermedia system used on the Internet,enables hypertext linking, whereby documents automatically reference orlink other documents located on connected computer networks around theworld. Thus, users connected to the Internet have almost instant accessto information stored in relatively distant regions. Currently, Internetusers retrieve information from the Internet, through the Web, by‘visiting’ a web site on a computer that is connected to the Internet.

The web site is, in general terms, an application that displaysinformation stored on a network computer. The web site acceptsconnections from programs, such as Internet browser applications.Browser applications, such as Microsoft Explorer™ or Netscape InternetBrowser™, allow Internet users to access information displayed on theweb site.

As the number of physical networks connected to the Internet continuesto grow, so too will the number of web sites that are accessible toInternet users and so too will commercial activity on the Internet.Providers of a wide range of products and/or services are continuouslyexploring new methods for using the Internet to accomplish businessgoals. Some companies use the Internet to purchase products throughon-line auctions.

However, products, such as transportation and Maintenance, Repair andOperations (MRO) components, that generally require quick turnaroundtimes cannot be purchased through on-line auctions since there isinsufficient time to alert suppliers about the auction and for thesuppliers to place their bids.

Most large companies have employees or expeditors that makeunplanned/“spot” buys on a regular basis as necessary for a company'sbusiness. These spot buys are specifically purchases that requirerelatively immediate delivery. For example a manager in a large companymay receive a request for transportation for immediate delivery ofproducts. Such requests may come at anytime of the day, although theyusually occur in the afternoon. Traditionally, the manager fills thespot needs by having the expeditor contact suppliers that have existingcontracts with the company, one at a time. As soon as a supplier agreesto fill the need, the employee stops calling other suppliers. Sincethere is a preexisting contract between the supplier and the company,the employee usually follows up with the price at a later time. Thismethod may take a lot of the expeditor's time based on the amount ofspot needs that must be fulfilled. In addition, the company usuallytakes the first price that is quoted without taking the time to locateand compare different quotes. Thus, the company loses both time andmoney in these transactions.

Currently, there are companies that provide business-to-businessprocurement solutions, mostly through on-line exchanges or throughsoftware packages that integrate with existing desktop applications. Onecompany offers a suite of bidding applications that can be used asstandalones or integrated with major electronic procurement packages.These business-to-business procurement solutions handle complexprocurement needs with extended bidding times. What is needed is aproduct that handles spot purchases with quick turnaround times.

SUMMARY OF THE INVENTION

The present invention is directed to a system and method for solicitingand receiving bids for goods or services necessary to satisfy a spotneed of a buyer. Initially, the system receives a request to procuregoods or services that are required to satisfy the spot need of thebuyer. The request includes information identifying the type of goods orservices being procured by the buyer. Next, the system automaticallyselects a group of potential bidders in response to the good or serviceidentified in the request by querying a database. The database includesa plurality of groups of potential bidders, wherein each of the groupsof potential bidders is associated with purchasing requests directed toa particular good or service. The system then electronically notifieseach of the potential bidders in the selected group of an opportunity tosubmit a bid to satisfy all or part of the buyer's purchase request. Thesystem electronically accepts bids from each of the potential bidders inthe selected group and selects a winning bidder in accordance with thereceived bids.

In accordance with one embodiment, the database also stores informationabout each supplier such as, for example, geographic areas where a givensupplier may be capable of delivering given goods or services, as wellas historical performance of the supplier in connection with one or moreprior on-line auctions. The historical performance information mayinclude, for example, the bidding pattern of a supplier during one ormore prior auctions, as well as the historical ability of the supplierto deliver particular goods or services following previous auctionswhere the supplier was the winning bidder. In this embodiment, the spotrequest from the buyer may further include information identifying ageographic location associated with the goods or services being procuredby the buyer. When such geographic information is included with therequest, the system may automatically select the bidders to invite byquerying the supplier database using both the type and geographiclocation information from the request.

Since the present invention is directed to meeting spot needs of buyers,the process of automatically selecting bidders for the auction,automatically inviting the bidders to the auction, conducting theon-line auction and selecting a winning bidder are preferably completedeither on the same business day that the request for procurement isreceived, or within 24 hours of receipt of the request.

The electronic communication used for inviting bidders to the auctionmay be sent to each of the selected bidders by, for example, posting amessage on an electronic message board or sending an electronic mailmessage to each of the selected bidders.

It is the object of the present invention to offer buyers a low cost,high productivity spot market system, in a network environment, formaking unplanned “spot” purchases that require quick turnaround times.

The spot market system of the present invention is optionallyimplemented as a portal that is accessible through an on-linemarketplace. This enables the provider of the on-line marketplace tooffer multiple products for servicing various clients' needs from onelocation. It also enables clients of the on-line marketplace to conductbusiness for themselves without paying for full services of a marketmaking team.

Additional features and advantages of the invention will be set forth inthe description that follows, and in part will be apparent from thedescription, or may be learned by practice of the invention. Theobjectives and advantages of the invention will be realized and attainedby the system particularly pointed out in the written description andclaims hereof as well as the appended drawings.

BRIEF DESCRIPTION OF THE DRAWINGS

The accompanying drawings, which are included to provide a furtherunderstanding of the invention and are incorporated in and constitute apart of this specification, illustrate embodiments of the invention thattogether with the description serve to explain the principles of theinvention.

In the drawings:

FIG. 1 illustrates a computer network in which the inventive system maybe incorporated;

FIG. 2 illustrates the TCP/IP Layering Model Protocol used duringcommunications between components on the computer network;

FIG. 3 illustrates a web page that an expeditor uses to post loadinformation on the spot market of the present invention;

FIG. 4 illustrates an e-mail message from the expeditor to a supplierinviting the supplier to participate in a spot auction;

FIG. 5 illustrates a web page in the spot marketplace where pre-selectedsuppliers place bids;

FIG. 6 illustrates a web page in the spot marketplace where an expeditorreviews bids placed by any of the pre-selected suppliers;

FIG. 7 illustrates an e-mail message from the expeditor to the winningsupplier;

FIG. 8 illustrates a web page in the spot marketplace where the winningsupplier confirms the award; and

FIG. 9 illustrates a method for implementing the present invention.

DESCRIPTION OF THE PREFERRED EMBODIMENTS

Reference will now be made in detail to the preferred embodiments of thepresent invention, examples of which are illustrated in the accompanyingdrawings. The present invention described below explains thefunctionality of the inventive system and method for using a computernetwork to address spot needs.

FIG. 1 is an example of a local area network (LAN) 100 that isconfigured to implement the inventive system. Note that while FIG. 1 isdirected to a local area network, it should also be apparent that othernetwork topologies, such as Ethernet, may be used. LAN 100 comprises aserver 102, four computer systems 104-110, and peripherals, such asprinters and other devices 112, which may be shared by components on LAN100. Computer systems 104-110 may serve as clients for server 102 and/oras clients and/or servers for each other and/or for other componentsconnected to LAN 100. As would be obvious to those skilled in the art,other network configurations, such a peer-to-peer configuration, may beused. Components on LAN 100 are preferably connected together by cablemedia, for example copper or fiber-optic cable and the network topologymay be a token ring topology 114. It should be apparent to those ofordinary skill in the art that other media, for example, wireless media,such as optical and radio frequency, may also connect LAN 100components.

Data may be transferred between components on LAN 100 in packets, i.e.,blocks of data that are individually transmitted over LAN 100. Routers120, 122 create an expanded network by connecting LAN 100 to othercomputer networks, such as the Internet, other LANs or Wide AreaNetworks (WAN). Routers are hardware devices that may include aconventional processor, memory, and separate I/O interface for eachnetwork to which it connects. Hence, components on the expanded networkmay share information and services with each other. In order forcommunications to occur between components of physically connectednetworks, all components on the expanded network and the routers thatconnect them must adhere to a standard protocol. Computer networksconnected to the Internet and to other networks typically use TCP/IPLayering Model Protocol. It should be noted that other internetworkingprotocols may be used.

As illustrated in FIG. 2, TCP/IP Layering Model comprises an applicationlayer (Layer 5) 202, a transport layer (Layer 4) 204, an Internet layer(Layer 3) 206, a network interface layer (Layer 2) 208, and a physicallayer (Layer 1) 210. Application layer protocols 202 specify how eachsoftware application connected to the network uses the network.Transport layer protocols 204 specify how to ensure reliable transferamong complex protocols. Internet layer protocols 206 specify the formatof packets sent across the network as well as mechanisms used to forwardpackets from a computer through one or more routers to a finaldestination. Network interface layer protocols 208 specify how toorganize data into frames and how a computer transmits frames over thenetwork. Physical layer protocols 210 correspond to the basic networkhardware. By using TCP/IP Layering model protocols, any componentconnected to the network can communicate with any other componentconnected directly or indirectly to one of the attached networks.

Specifically, in the invention, a spot market system may reside eitheron server 102 or computers 104-110. The computer hosting the spotmarketplace accesses a supplier database with information about aplurality of groups of potential bidders/suppliers, wherein each of thegroups of potential bidders is associated with purchasing requestsdirected to a particular good or service.

The spot market system is a web-based application that is implemented ona computer network, such as the Internet, thus creating a spotmarketplace on the Internet. In a preferred embodiment, when there is aspot need that requires immediate response from multiple suppliers, theexpeditor posts information about the spot need on the spot marketplace.For example, if there is a transportation request that requires acarrier to immediately deliver products in a transportation load, theexpeditor posts information about the transportation load on the spotmarketplace. Suppliers using computers connected to the computer networkmay access the information on the spot marketplace. FIG. 3 illustrates aweb page that the expeditor uses to post the load information on thespot market.

The spot market system automatically selects a plurality of suppliersthat are capable of fulfilling the transportation request by queryingthe supplier database with information from the transportation request.The supplier database includes records identifying suppliers capable ofsupplying a plurality of different goods and services to the spotmarketplace. For each supplier represented in the supplier database, arecord is stored in the supplier database, which includes informationrepresenting the capabilities of the supplier to deliver at least onegood or service. The system then automatically invites the suppliersselected from the supplier database to bid on the spot need by sendingan electronic notification to each of the selected suppliers.

In accordance with a preferred embodiment, the supplier database alsostores information about each supplier such as, for example, geographicareas where a given supplier may be capable of delivering given goods orservices, as well as historical performance of the supplier inconnection with one or more prior on-line solicitations for bids. Thehistorical performance information may include, for example, the biddingpattern of a supplier during one or more prior solicitations, as well asthe historical ability of the supplier to deliver particular goods orservices following previous requests where the supplier was the winningbidder. In this embodiment, the spot request from the expeditor mayfurther include information identifying a geographic location associatedwith the goods or services being procured. When such geographicinformation is included with the request, the system may automaticallyselect the suppliers by querying the supplier database using both thetype and geographic location information from the request.

Since the present invention is directed to meeting spot needs of buyers,the process of automatically selecting suppliers for solicitation,automatically inviting the suppliers to bid and selecting a winningbidder are preferably completed either on the same business day that therequest for procurement is received, or within predetermined hours ofreceipt of the request.

Only suppliers that are automatically selected by the system are allowedto bid in the spot need. Preferable, the electronic notification is ane-mail message from the expeditor to the pre-selected suppliers.However, other notification means, such as personal digital assistantsand pagers, may be used. The notification includes a time for thesuppliers to post a bid and a deadline when all bids must be posted.FIG. 4 illustrates an e-mail message from the expeditor to the suppliersinviting the suppliers to participate in the spot marketplace.

Thereafter, at a predetermined time, the suppliers go to the spotmarketplace and post sealed bids before the deadline. In a preferredembodiment, suppliers who wish to bid must do so before the stateddeadline and no bids are accepted after the deadline. When each supplierposts a bid, the bid is sealed and other suppliers are not allowed tosee any information about the bid. In an alternate embodiment, thesuppliers may posts partially open bids. After posting a first bid, thesupplier is allowed to revise the bid until the deadline. It should benoted that suppliers will not be allowed to revise their bids after thedeadline. All bids are valid for the day of the request until a winningsupplier is awarded the bid and notified of the award. After the winningbid is awarded, all other suppliers are also notified about theirstatus. FIG. 5 illustrates a web page in the spot marketplace where thepre-selected suppliers place bids or decline to bid. After the deadline,the expeditor reviews all bids and makes an award. FIG. 6 illustrates aweb page in the spot marketplace where the expeditor reviews the bidsand makes an award to a winning supplier. The expeditor sends a secondnotification to all suppliers and informs the winning supplier of theaward. FIG. 7 illustrates an e-mail message from the expeditor to thewinning supplier. The winning supplier confirms the award by visiting aweb page in spot marketplace. FIG. 8 illustrates a web page in the spotmarketplace where the winning supplier confirms the award.

Since the spot market is a portal that is accessible through an on-linemarketplace, the provider of the on-line marketplace to is able offermultiple products for servicing various clients' needs from onelocation. It also enables clients of the on-line marketplace to conductbusiness for themselves without paying for full services of a marketmaking team.

FIG. 9 illustrates steps implemented in the inventive system. In Step9010, the buyer enters a request to procure goods or services that arerequired to satisfy the spot need of the buyer into the spot marketsystem. In Step 9020, the system automatically selects potential biddersin response to the good or service identified in the buyer's request byquerying the supplier database. In Step 9030, the system electronicallynotifies each of the potential bidders in the selected group of anopportunity to submit a bid to satisfy all or part of the buyer'spurchase request. In Step 9040, the system electronically accepts bidsfrom each of the potential bidders in the selected group. In Step 9050,the system selects a winning bidder in accordance with the receivedbids.

The foregoing description has been directed to specific embodiments ofthis invention. It will be apparent, however, that other variations andmodifications may be made to the described embodiments, with theattainment of some or all of their advantages. Therefore, it is theobject of the appended claims to cover all such variations andmodifications as come within the true spirit and scope of the invention.

1. A method, comprising: receiving a request to procure goods orservices that are required to satisfy a spot need of a buyer, wherein atleast one aspect of the spot need of the buyer is a requirement that therequested goods or services be available for immediate delivery, whereinthe request includes information identifying a type of good or servicebeing procured by the buyer, and wherein the request includes geographicinformation; querying, using a processor, a database of informationrepresenting the capabilities of suppliers to deliver goods and servicesto geographic areas and automatically selecting as potential bidders foran auction those suppliers whose capabilities satisfy at least a portionof the request; electronically notifying each of the potential biddersof an opportunity to submit a bid to satisfy all or part of the buyer'spurchase request; conducting the auction that includes electronicallyaccepting bids from those potential bidders that each provide one ormore bids before a bidding deadline expires and not accepting the bidsafter the bidding deadline expires; and automatically selecting one ormore winning bidders in accordance with the received bids.
 2. The methodof claim 1, wherein automatically selecting, electronically notifying,electronically accepting and selecting a winning bidder are completedwithin the same business day of receipt of the request.
 3. The method ofclaim 1, wherein automatically selecting, electronically notifying,electronically accepting and selecting one or more winning bidders arecompleted within 24 hours of receipt of the request.
 4. The method ofclaim 1, wherein automatically selecting, electronically notifying,electronically accepting and selecting one or more winning bidders arecompleted within a predefined amount of hours of receipt of the request.5. The method of claim 1, wherein the electronically notifying furthercomprises posting a message on an electronic message board.
 6. Themethod of claim 1, wherein the electronically notifying furthercomprises sending an electronic mail message to each of the selectedbidders.
 7. The method of claim 1, wherein one or more steps in themethod are performed by the buyer.
 8. The method of claim 1, furthercomprising posting information about the request on a web page in a spotmarketplace.
 9. The method of claim 1, further comprising including abidding time period and the bidding deadline in an electroniccommunication.
 10. The method of claim 1, wherein the electronicallynotifying further comprises instructing the selected bidders to postbids before the bidding deadline.
 11. The method of claim 1, wherein theelectronically notifying further comprises instructing the selectedbidders to post sealed bids before the bidding deadline.
 12. The methodof claim 1, wherein the electronically notifying comprises instructingthe selected bidders to post partially open bids before the biddingdeadline, wherein after a first bid each supplier may revise subsequentbids until the bidding deadline passes.
 13. The method of claim 1,wherein the selecting further comprises notifying all bidders who postedbids about their status.
 14. The method of claim 1, wherein selectingone or more winning bidders further comprises notifying the one or morewinning bidders of an award by electronic communications.
 15. A system,comprising: a supplier database comprising information representing thecapabilities of potential suppliers to deliver goods and services togeographic areas; and a computer in communication with the supplierdatabase and configured to: receive a request to procure goods orservices that are required to satisfy a spot need of a buyer, wherein atleast one aspect of the spot need of the buyer is a requirement that therequested goods or services be available for immediate delivery, whereinthe request includes information identifying a type of goods or servicesbeing procured by the buyer, and wherein the request includes geographicinformation; query the database and automatically select as potentialbidders for an auction the suppliers whose capabilities satisfy at leasta portion of the request; electronically notify each of the potentialbidders of an opportunity to submit a bid to satisfy all or part of thebuyer's purchase request; conduct the auction, wherein conducting theauction includes electronically accepting bids from those potentialbidders that each provide one or more bids before a bidding deadlineexpires and not accepting the bids after the bidding deadline expires;and automatically select one or more winning bidders in accordance withthe received bids.
 16. The system of claim 15, wherein each of thebidders is electronically coupled to a spot marketplace.
 17. Anon-transitory computer readable medium comprising instructions which,when executed, cause a computer to: receive a request to procure goodsor services that are required to satisfy a spot need of a buyer, whereinat least one aspect of the spot need of the buyer is a requirement thatthe requested goods or services be available for immediate delivery,wherein the request includes information identifying a type of good orservice being procured by the buyer, and wherein the request includesgeographic information; query a database of information representing thecapabilities of suppliers to deliver goods and services to geographicareas and automatically select as potential bidders for an auction thosesuppliers whose capabilities satisfy at least a portion of the request;electronically notify each of the potential bidders of an opportunity tosubmit a bid to satisfy all or part of the buyer's purchase request;conduct the auction that includes electronically accepting bids fromthose potential bidders that each provide one or more bids before abidding deadline expires and not accepting the bids after the biddingdeadline expires; and automatically select one or more winning biddersin accordance with the received bids.